BoU in crisis: Who takes responsibility as COSASE finalises report of inquiry?

The Bank of Uganda (BoU) has been exposed as wanting in terms of its operations and human resource especially in the senior staff following the conclusion of the probe of the central bank by parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

COSASE chaired by MP Abdu Katuntu concluded its probe BoU over the controversial closure of seven commercial banks such as Teefe Trust Bank, Greenland Bank, International Credit Bank (ICB), Cooperative Bank, National Bank of Commerce (NBC), Global Trust Bank Uganda (GTBU) and Crane Bank Limited (CBL). The MPs are now in Jinja writing a report that is likely to cause massive changes at BoU should government act on the recommendations.

During the investigations about six BoU officials stood out. They included; Governor Emmanuel Tumusiime-Mutebile, his deputy Dr. Louis Kasekende, former Executive Director for Supervision Ms Justine Bagyenda, Ben Sekabira, the Director Financial Markets Development Coordination, Margaret Kasule, the legal counsel and Katimbo Mugwanya, now retired from BoU but acted as statutory manager for CBL. The crisis at BoU is blamed on these officials who did not do their work as expected, more in the supervision of banks and management of their closure.

Emmanuel Tumusiime- Mutebile

Emmanuel Tumusiime-Mutebile has been credit for checking Uganda’s inflation since he joined BoU in January 2001. Apart from the year 2011, Tumusiime-Mutebile through monetary policy regulation has kept inflation within a single digit target.

However, Mutebile seems to have kept a blind eye as far the supervision and regulation of the financial sector is concerned when one considers under the Financial Institutions Act 2004 and the Micro Finance Deposit Taking Institutions Act 2003 and Implementing Regulations. This was imminent in the closure of National Bank of Commerce, Global Trust Bank Uganda and CBL. Mutebile during COSASE probe admitted that he has never seen most of the documents related to the closure of several banks. He would later contradict himself that he signed documents in the sale of GTBU after saying he never saw any documents. It caused drama in parliament with some Members of Parliament suggesting he be put on oath. On that, sections think Mutebile, aged 70, should retire.

Dr. Louis Kasekende

Very rich, Dr Kasekende, is as guilty as his boss Tumusiime-Mutebile. He failed to follow up issues related to the closure of banks. He failed to supervisor officials who were below him especially Bagyenda, Sekabira. He also tried hard to stop the Auditor General from investigating BoU. He knew all was not well as far as BoU’s operations were concerned. In his report, the Auditor General revealed that banks were closed without guidelines. He went ahead to say critical documents were missing. By the time COSASE concluded its probe, some of those documents were missing especially on GTBU, CBL, Teefe Trust Bank and Cooperative Bank. Kasekende approved Shs478 billion injected in CBL but failed to provide accountability for all the money.

Justine Bagyenda

Wealthy, Justine Bagyenda rose through the ranks to become the executive director of bank supervision before retiring mid-2018.In that position, as COSASE probe found out, she had become powerful that sometimes she took decisions on her own without consulting her bosses. Bagyenda is alleged to have hidden crucial documents related to closure of some banks, though she denied that during COSASE inquiry. She said to have contacted buyers of GTBU and CBL over phone and later drafted sale agreements without much involvement of Mutebile. She was so powerful that the majority shareholder in CBL Sudhir Ruparelia told MPs on COSASE that Bagyenda forced his then operating bank to buy some properties of NBC. That he said was done on phone. Former owners of CBL, NBC and GBTU told MPs that Bagyenda was solely responsible for the closure of their banks. They now want compensations in hundreds of billions of shillings. The taxpayer is likely to incur more losses should the compensation be okayed by parliament and central government. It should be remembered that the whole COSASE inquiry almost revolved around Bagyenda.

Ben Sekabira

Mr. Ben Sekabira is one of the longest serving officials at BoU, having joined that institution as a junior banking officer. Actually Mutebile, Kasekende and Bagyenda found him there. And he testified during COSASE probe that he witnessed and participated in the closure of most of the banks closed in the 1990s where he acted as a statutory manager. Sekabira in one of the sessions with MPs said he used to hand reports on closed commercial banks to his former bosses Edward Katimbo Mugwanya and Bagyenda. With those reports missing, it created controversy on who was telling the truth. Sekabira would later tell MPs that much as BoU injected Shs478 billion in CBL, it only needed Shs157 billion to stay afloat before Bagyenda cleared its closure on October 20, 2016. Sekabira contradicted his boss Mutebile who told MPs that he did not have figures regarding CBL’s undercapitalisation.

Edward Katimbo Mugwanya

Mr Edward Katimbo Mugwanya, was a former director at BoU who was appointed Statutory Manager for the sale of CBL, admitted that he did not know how the money that was injected in Crane Bank was arrived at. That query was raised by the Auditor General in his report that COSASE used to pin BoU officials. At the time CBL was closed Mugwanya had never written any report on the liquidation process of the bank.

Mrs. Margaret Kasule

Mrs. Margaret Kasule as BoU’s legal counsel leaves a lot to be desired as far her job is concerned. During the probe she was exposed to the extent that she failed to answer critical questions as regards the closure of banks. She was confused on which particular people ordered the closure of some banks. She also found difficulties in explain how the purchase and acquisition of liabilities agreements were reached at as Dfcu bank acquired GTBU in 2014 and CBL in 2017. At one time she also failed to explain the status of properties of closed banks. COSASE Chairperson Katuntu had to lecture her to understand. But she also allowed Bagyenda to negotiate sales agreements for GTBU and CBL, without her involving so much.

Her incompetence allowed MMKAS Advocates to do most of the work in sale of banks’ assets, earning about Shs4.2 billion that MPs said was so exorbitant, even though the lawyers explained how they arrived at that amount. Paying local service providers by government in foreign currency is prohibited under the law but Kasule allowed this to go on as BoU paid MMKAS Advocates part of this money in dollars.

While responding to MPs on COSASE during one of the sessions Mutebile accepted that all was not well at BoU. “I would like to thank you in particular, for your candid approach to tackling issues that you believe needed to have been addressed, or at least taken into consideration by the staff of the Bank of Uganda. I also would like to express my appreciation to the Auditor General for his report which raised issues that will culminate in an improvement in the operations of Bank of Uganda.

He added: “The Bank of Uganda acknowledges the relevance of this exercise and we are confident that it will enhance transparency and accountability, which are key values that the Bank upholds. This has highlighted the shortfalls within our processes, policies and practices.”

He continued: “It has been a learning process not only for the management but also for the staff who followed the proceedings closely, and I am confident that resulting from this process, we will review ourselves, the bank’s processes and policies in order to strengthen our capacity to perform the functions of the Central Bank better.”

Tumusiime-Mutebile said he would put in place measures that translate BoU into a stronger institution that boosts the confidence of the public. “We want to see a stronger financial sector and economy built on the confidence that the public has in us,” he concluded.